Large U.S. Firms Are Raising Dividends As Profit Margins Surge To 18-Year High

Wednesday, March 16, 2011 05:35
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Large U.S. Firms Are Raising Dividends As Profit Margins Surge To 18-Year High

Amid all the bad news about high unemployment and looming inflation, U.S. corporations are seeing a dramatic jump in profitability.

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Profits among the S&P 500 index companies will rise 16% this year and surpass $100 a share for the first time in 2012, according to analysts surveyed by Bloomberg. Margins are expected to climb to 8.9% this year, the highest level since 1993.


That is already opening the floodgates on dividends, since many companies started holding cash in reserve after the 2008 economic meltdown erased revenues.


A total of 95 companies have raised dividends recently in the wake of five straight quarters of earnings growth, Bloomberg reports. Of the 380 companies that pay dividends, 378 are forecast to maintain or increase them, according to data compiled by Bloomberg.


John Carey, a money manager at Pioneer Investments, says, “I feel relatively confident that most of the dividends out there are secure, and we’ll see some fairly broad-based increases.”


The Bloomberg study provides solid backing for those analysts who have recently been recommending a return to large-caps as the economic recovery enters its third year.

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